Bradford & Bingley spurns Resolution offer

Thursday, 26 June 2008 12:00 AM

High street lender Bradford & Bingley (B&B) has denied investment organisation Resolution access to its books, as it tries to distance itself from the organisations bid.

Resolution is planning to put £400 million into B&B as a part of a £2 billion scheme for the mortgage lender.

B&B is standing by its plan to go ahead with a £179 million investment deal with Texas Pacific Group (TPG) for a 23 per cent stake, augmenting a £258 million rights issues, but is not ruling out the Resolution move.

A B&B spokesperson said: "The door is still open and we are still open for conversations."

Resolution - headed by Clive Cowdery- is now believed to be planning its next move given after being refused due diligence access by Bradford & Bingley.

The investment group currently owns a 2.9 per cent stake in B&B.

Since the announcement of the deal the B&B share price has increased from 66p on close of Monday to a current level of 77p.

This still compares with a year-high of 435.50p.

The bank - which is Britain's largest buy-to-let lender - has had a torrid 2008, slipping £8 million into the red during the four months to April, following an increase in defaults on its mortgage book and wholesale funding concerns.

Under the Resolution plans, B&B would remain a listed company, but the investment firm would take a controlling percentage of the shares in the organisation.

The funds for the deal are likely to come from the four shareholders in discussion with Resolution; Insight, Legal & General, Prudential and Standard Life.

Under the plans Bradford & Bingley would then become the corner stone of a larger collection of banks, consolidating the second tier of the banking sector.

Resolution is pushing for B&B's board to recommend its plan by July 4th.

Daniel Barnes

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